The Japanese yen's rapid depreciation, primarily affected by the widening interest rate gap between the yen and the U.S. dollar, is set to lead to greater economic uncertainty in Japan, said a Japanese economist.
On Thursday, the yen fell to 155.74 against the U.S. dollar in Tokyo, breaking the threshold of 155 and hitting a fresh 34-year low.
"In Japan, low interest rates are expected to continue for now, putting pressure on the yen's value to drop. The yen's depreciation is also due to the strong U.S. dollar. Previously, the U.S. Federal Reserve Chair Powell said that the Fed is set to cut U.S. interest rates three times this year. However, there are market concerns now that there might be fewer cuts, or even none at all this year. The strong U.S. dollar is causing a lot of money to flow into the country. The ongoing appreciation of the U.S. dollar has also led to a decrease in the value of the yen," said Hideo Kumano, chief economist at the Dai-ichi Life Research Institute in Japan, in a recent video interview.
In addition, Kumano warned that the rapid depreciation of the yen could pose challenges for Japanese import and export firms. Given Japan's heavy reliance on imports for essentials like energy, minerals and food, higher import costs are likely to increase the living expenses for Japanese people.
"For Japanese import and export businesses, the ongoing trend of yen depreciation seems endless. This will result in a continuous rise in import prices, posing significant challenges. If the yen continues to depreciate, Japanese assets may be increasingly shifted overseas," said Hideo Kumano.
Due to the persistent depreciation of the yen and the rising cost of living in Japan, many people are feeling the strain on their daily life.
"I work at a bakery, and now bread prices have gone up. The bakery manager says the costs of ingredients has kept rising. It's been tough," said a Tokyo resident.
"When I go to the supermarket, I can clearly feel that prices for food and other items have gone up," said a Tokyo resident.
"For those living here, life is quite tough. Our wages haven't gone up, and even though I'm retired, I still do odd jobs," said a Tokyoite.
According to Kumano, the yen's significant depreciation against the U.S. dollar in the short term adds more uncertainty to Japan's economy. While the Bank of Japan is considering measures to stabilize the exchange rate, their effectiveness remains uncertain.
"Although the Japanese government wants to halt the yen's further depreciation in the foreign exchange market, and claims it can control currency fluctuations, the actual flow of significant private funds is influenced by the monetary policies of both the U.S. and Japan. As a result, it has become challenging to prevent the yen from depreciating further and the U.S. dollar from appreciating," said Kumano.
Yen's rapid depreciation causes greater economic uncertainty in Japan: economist
Yen's rapid depreciation causes greater economic uncertainty in Japan: economist
A growing number of French companies consider China an important part for their growth, as highlighted by their increased investment in the Chinese market over the years, said Gary Rosen, CEO of AccorHotels Greater China, during an interview on Monday.
Covering massive business operations in the Greater China region for a French multinational company, Rosen has witnessed the close cooperation between China and France in the tourism and hospitality sector. French companies are increasing their direct foreign investment in China, as cooperation between the two countries have brought unexpected benefits, said Rosen during a program aired on China Global Television Network (CGTN).
"I think the starting point really is -- you see how the two countries work together and they really make an effort to work together, and that comes alive in the business community. Whether you look at different sectors, the growth for both companies, and especially that foreign direct investment into China, you wouldn't have that if you didn't have such strong ties over the last 60 years. And certainly, those are going to continue moving forward. And this trust that has been built between a French company and multiple Chinese companies to make a much wider proposition and growing the hospitality sector in China, that couldn't be done if you didn't have great relations and diplomatic relations, and the recognition by the two countries and the governments of two countries. Many French companies [are] recognizing that China is an important part of their growth around the world. But recognition-the role the Chinese guest and consumer plays as we were talking earlier. The future is a bright one, the strength of the relationship only makes it that much brighter. And I think we've entered a recognition that when you look at these two countries together, you have a 'one plus one equals 10' outcome," he said.
Rosen highlighted the robust growth of AccorHotels in the Greater China region, adding that it is a testament of how the Chinese market has enormous opportunities in store. "There's volume growth and then there's growth where you have to learn and be able to also nurture your own brand's growth. And that's particularly why in this area we focus, particularly when you think about premium and luxury, we have that growth and there's never been for us so much growth and opportunity. We are having records breaking years. In 2022 we had a record-breaking year in terms of new-signings, signings of new hotels. 2023 broke 2022 record. We have signed close to 150 new hotels in 2023 that will open over the course in the next few years. That's significant growth that has put us at the front in terms of global hospitality for players here in China," he said.
As this year serves a year of culture and tourism between the two countries, Rosen expressed confidence in boosting culture and tourism exchanges between the two sides.
With beautiful landmarks, shopping, special food, and with the upcoming 2024 Paris Olympic Games, the CEO believes that France will see more and more Chinese tourists in the near future. He also expressed confidence in Chinese tourism market, which has been on a positive trajectory overall.
"[I'm] very comfortable to say that China is still seen to be by 2035, to be the largest global tourism market in the world. If you look at what the McKinsey's, what the 'big five' [consultancies] are talking about. They're all still in that position and that's a great place to be," he said.
Chinese market plays pivotal role in spurring growth of French companies: business executive
